It may not be doing President Bill Clinton much good, but while his political fortunes oscillate between bad and disastrous, the US economy is poised to round out 1994 with its best performance in almost a decade.
Figures released yesterday merely confirm what is evident from the ever-lengthening jobs vacant columns and teeming Christmas stores: this year is the best economic vintage since the height of the Reagan Boom - a rare combination of vigorous growth, low inflation and a declining budget deficit.
During the third quarter, according to final revised figures from the Commerce Department, GDP grew at 4 per cent and consumer prices at less than 3 per cent. The final quarter is likely to be better still, with expansion of anything up to 5 per cent, while even the resolutely pessimistic bond market seems to have convinced itself that this particular boom will not end in an inflationary bust. For the third year running, the federal deficit is set to decline in fiscal year 1995, to $167bn (£107bn), an eminently respectable 2 per cent or so of GDP. Unemployment, meanwhile, fell to a four-year low of 5.6 per cent last month. Industrial output and consumer confidence are bubbling - what more could a politician ask for?
Alas for this president, the conventional relationship between politics and the economy no longer obtains. The famous slogan of the 1992 War Room in Little Rock, "It's the Economy, Stupid," reflected the correct assessment of the Clinton campaign that the anaemic recovery from the 1990-1991 recession - and the White House's indifference to it - would be George Bush's downfall.
The reverse has not been true. Just as in Britain where the upward surge in the economy is matched only by John Major's downward plunge in the polls, Mr Clinton can draw no profit from a recovery his policies have undeniably helped to foster, most notably the hard-won deficit-cutting package of August 1993 which may prove his greatest achievement. This $500bn mixture of tax increases and spending cuts contributed to interest rates staying lower for longer than would otherwise have been the case. Falling credit and mortgage rates were the reward.
Americans, though, are in an ungrateful mood. The best explanation the pollsters can come up with is a widespread but ill-defined "economic insecurity, a feeling that the US is losing ground in the global prosperity stakes, and that the country is on thewrong track".
Hence, in part, the growing appeal of America First nationalists on the right and protectionists on left. And hence, perhaps, the astounding 49-41 per cent disapproval rating for Mr Clinton's handling of the economy. And if he is not getting credit now, it is unlikely he ever will. In terms of the presidential cycle, this recovery almost certainly will have peaked too soon; 1994 will probably prove the highwater mark of this economic cycle. The OECD expects growth will taper off to 2 per cent or less when the election comes around in November 1996.
Federal Reserve strategy is to secure a "soft landing" back to growth of 2.5 per cent, which it reckons is the maximum expansion sustainable in the longer term without inflation. To that end, it has raised interest rates six times this year and, althoughthe Federal Open Market Committee held off this week, a seventh rise is all but certain when it meets at the end of January.
So far, higher rates have had little impact. But even if inflation does not climb much above 3 per cent, most economists believe they will be biting by 1996, nudging unemployment up. Some argue the Fed has done more than enough to generate another recession. That may be an exaggeration. But next time, the economy will not be Bill Clinton's salvation.
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